Hamilton Kent Blog

Monday December 7, 2015

There’s a certain amount of concern that comes when the United States’ Department of Transportation announces that they will have to stop making infrastructure payments to state and local governments, thanks to a near-bankrupt Highway Trust Fund (HTF). The fund was down to $6.5 billion in July before receiving an $8 billion boost that was meant to last until June 2016.

A number of stopgap solutions have been put into place to keep the HTF afloat—34 short term solutions since 2008 to be exact.

Finally, Obama has signed the $305 billion FAST Act passed by the House and Senate negotiators to provide long-term funding for five years. Here’s what we know about the bill:

FAST Act Facts

A conference of negotiators from both the Senate and the House decided on the act after each passing the separate DRIVE Act and STRR Act over the past five months and working out their differences.

The bill is called the Fixing America’s Surface Transportation (FAST) Act. A summary of the act emphasizes funds for roads and bridges, public transportation, safety, hazardous material reforms and railroads and will update research and transportation standards developments for the growth of technology.

The FAST act, though one year shorter than the two Acts passed by the Senate and the House separately, will allow for more spending annually.

How is it being funded?

The FAST Act reapproves the fuel tax at 18.4 cents for gas and 23.4 cents per gallon for diesel. This is the same rate that the tax has been for more than two decades—raising the tax is seen as less-than-favorable as lower-income drivers tend to have cars with lower gas mileage, meaning that they would end up paying more towards the HTF.

The amount of revenue coming from this tax is also decreasing due to more fuel-efficient cars and fewer drivers on the roads. This means that fewer that 50 percent of the funds that are currently paying for highway infrastructure are coming from the fuel tax and are instead coming from other general taxes. This has added up to for the fund, and a $16 billion deficit—and is still unable to keep up with the need for maintenance.

New funding for the FAST Act will come from tax collection services that will be contracted out to private companies, as well as customs fees, and passport rules for those with delinquent taxes. This means those with over $50 000 owed to the IRS could see their passports confiscated—a tactic that is slated to raise $400 million over a decade.